David Knezek: Cut our veterans a break by restoring Earned Income Tax Credit

May 12, 2013

David Knezek

Written by

David Knezek

Detroit Free Press guest writer

We all want to honor and assist our military families, not only as they serve our country at home, but also upon their return from protecting our nation overseas.

In the past, Michigan has supported its veterans by providing a strong Earned Income Tax Credit (EITC) to low-income families — including those in the military. In doing so, the state helps to offset the sales and property taxes that low-income families pay, often at a higher rate than high-income families.

In 2011, Gov. Rick Snyder and the Republican majority in the Legislature cut support to military families by slashing the state’s EITC from 20% of the federal credit to just 6%. The EITC reduction was part of their $1.8-billion tax cut to businesses — a measure that has yet to produce meaningful job growth in our state.

As a Marine, I learned firsthand how difficult it can be for members of the military and their families. Pay for enlisted men and women can be quite low — as a lance corporal serving in Iraq, my yearly pay was slightly more than $20,000 a year. It is estimated that about 12% of military families are eligible for the EITC. In Michigan, that means roughly 10,000 active duty military men, women and their families were negatively impacted by increased taxes as a result of the EITC reduction. Many of them are my friends.

A married staff sergeant with seven years of service in the Marines and two children makes about $35,228. The staff sergeant used to be eligible for a state credit of $502. But now, under the tax increases imposed by Republicans, his family receives just $150 in state EITC — a $352 increase in his state tax bill.

A married lance corporal with two children and four years of service earns about $24,170. His family used to receive $968 in the state EITC. He has seen a $677 increase in state income taxes, and is now eligible for just $291 from the EITC.

When combined with a well-developed state EITC, this tax credit is probably the nation’s best poverty fighting tool. In fact, the states with the highest poverty rates tend to be those without a state EITC. Comparatively, states with low poverty rates have a more adequate EITC, most at the 20% level Michigan used to provide. It is a proven hand-up to working families — not a handout.

Despite the efforts of a number of Democrats, including myself, additional funding for the EITC was not included in early versions of the budget passed by the House and Senate. I respectfully encourage the governor to support House Bill 4266, to restore the EITC to 20%. It’s the least we can do for Michigan’s veterans.

David Knezek, a Democrat from Dearborn Heights, represents Michigan’s 11th District in the state House of Representatives.